UTi Deutschland GmbH: New leading freight forwarder at CargoCity South

New leading freight forwarder at CargoCity South

With more than 500 branches in over 135 countries, UTi is one of the leading providers in the logistics industry

After several decades of doing business in Kelsterbach, the international airfreight forwarder UTi relocated its operations to CargoCity South in January 2015. We spoke with Michael Hollstein, Managing Director Nordic-DACH Cluster.

A number of factors make the Frankfurt Airport hub such an attractive site, including its central location in Germany and Northern Europe, the existing infrastructure and its ongoing enhancements, the wide range of airfreight carriers and providers of logistics services, as well as the airport’s service spectrum, which continues to grow. The great variety of services offered results in many qualified specialists who are complemented by modern and innovative companies. The connections to neighboring countries make it possible to operate efficient gateway systems for incoming and outbound traffic and ensure the airport’s ability to compete with other major European hubs.

What other plans do you have in store for FRA in the near future?

After several decades of doing business from Kelsterbach, we relocated to our newly constructed building at CargoCity South in January 2015. In cooperation with Fraport, we have created a modern storage and handling facility that, together with offices and administration areas, encompasses some 10,000 square meters in total. Throughout the process, we placed great emphasis on especially sustainable construction. At the moment, we are adding cold-chain capacities for pharmaceutical products to our storage site. The project is scheduled for completion by the end of the first quarter and will apply to GDP standards. Once finished, we will be able to offer our customers an even wider range of services across the airfreight supply chain.

What is your assessment of the cargo market’s general development?

We are cautiously optimistic about where the freight market is headed. IATA has forecast average growth of more than four percent for the calendar year 2015, though the prospects vary from region to region. Asia and the United States harbor the greatest potential for growth. The most recent fuel surcharge developments, regardless of various airlines, have made airfreight more attractive and could possibly slow the trend of switching from air to sea freight, at least at some companies.

In the long term, the current performance of the Euro compared to the Dollar will lead to a sharp increase in exports from Europe, while the number of imports to Europe will fall. External factors, such as the current events at seaports on the West Coast in the United States, are also contributing to greater airfreight demand. This demand is not limited to standard routes, either. Rather, it is focused on alternative routes from Europe to the United States. In turn, this development is leading to an overall rise in current market rates.

Last year’s peak season was also unusually busy. However, if you look at previous years, peak seasons were always only due to unanticipated product launches (such as cell phones and tablets) – contrary to the origin of peak seasons.

Which product groups hold the greatest potential for growth right now?

The market for temperature-controlled goods, such as pharmaceutical products, is growing rapidly, and airlines and service providers that have focused their investments and capacities on this segment will now benefit greatly from increased demand.

In general, the healthcare sector is a strong growth market. This segment includes medical products intended for consumers, as well as devices for hospitals and clinics. Deliveries are not limited to wealthy countries, either. For quite some time, the supply of such products to emerging nations has been increasing. The favorable economic development in these countries has enhanced the commercial benefits of purchasing such devices.

The market for higher-quality electronics also continues to harbor strong potential, though that potential is always linked to the timing of the launch of specific products. In the meantime, the transport of normal electronic goods, such as laptops and hard drives, has shifted almost entirely to sea freight. However, we naturally see an increase in the number of ad hoc shipments during periods of sales-related bottlenecks and production backlog.

The sharp decline in oil prices means less is being invested into new projects in the energy, mining and project-cargo business segments. At the same time, however, this usually means an increase in air cargo, as old plants and sites remain in operation. In the long term, older plants require a greater number of replacement parts.

The automotive sector is stable. Large volumes of sea freight are consistently rebooked as air cargo, especially during periods of congestion at seaports. We also view falling oil prices as a sales factor for new vehicles. The production of new cars has a positive impact on the related business of delivering parts to the manufacturers.

What was the most interesting piece of cargo that you have ever transported?

In collaboration with Cathay Pacific, we transported an asphalt paver from Frankfurt to Tokyo in early February. The paver weighed an incredible 25.5 metric tons in total. Due to the size of the aircraft, the heavy piece of machinery first had to be disassembled into its constituent parts. But even then the paver’s body still weighed 16.4 metric tons.